The Illinois Tuition Tax Credit: Who Gets the Credit? Who Pays the Consequences?

How the Illinois Tuition Tax Credit Works

The Illinois tuition tax credit law allows parents to claim a tax credit on tuition, books and lab fees at public, private and parochial schools. Taxpayers can annually claim a 25 percent credit on qualified educational expenses they incur over and above $250, up to a maximum of $500 per family. 18 In order to claim the maximum credit of $500, parents would therefore have to spend $2,250 on qualified educational expenses. To claim a $100 credit, parents have to spend $650 on qualified educational expenses. Tax credits can be claimed for any full-time student enrolled in a K-12 school, who is a resident of Illinois and is under 21 years of age. 19

While the Illinois law was written to theoretically benefit taxpayers whose children attend public schools, these taxpayers receive very little in the form of tax credits. Since only private schools charge tuition—which can be a significant expense—the tax credit serves primarily as a reward for Illinois parents who send their children to private schools.

Given that many parents with children in private schools would have enrolled their children in these schools even without the credit, the tax credit effectively allows these parents to subsidize a private school education with dollars that would otherwise have gone to public schools or other state priorities. Indeed, the law’s inclusion of public schools may simply have served as a way to secure political and/or legal support for the measure.